Losing Your Inventory Before It Hits The Sales Floor

By Scott Matza, Product Manager, XBR Analytics and Sean Manion, VP of Sales, MICROS-Retail

Intentionally or not, some of the merchandise you paid for will never have the opportunity to be sold. You probably accept this loss as a cost of doing business, but you don't need to. By taking these steps to identify, reduce, and control this inventory shrink, you will see an immediate improvement in your chain's profitability.

Using analytics software to evaluate warehouse and back-of-store data requires you to establish some baseline information against which you will run comparison and trending reports. The comparisons are focused on specific situations, such as which store had the most damages during the month of January. A trending report on that topic would show which stores consistently have the most damages over individual weekly or monthly periods.

By trending information you can identify patterns that may represent extensive fraud. Is there one store with excessive throwaway activity? You will want to identify that store and then run adhoc reports to discover variations within that group that would point to employee involvement or problems with specific UPCs.

Common baselines for this type of research are inventory control records (ICR) and balance on hand (BOH). The ICR provides statistical information for inventory related activity for each store, date, UPC, and transaction type including quantity and dollar amount. The BOH is a snapshot of the inventory level of your UPCs at a particular store at a given point in time. By calculating the BOH at regular intervals you can perform trending analysis to uncover a pattern that points to a dishonest individual or team.

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